Investment in Glasgow offices has exceeded levels last seen a decade ago and could be in line for its best-ever year, according to analysis from Knight Frank.
The independent property consultancy said that the recent sales of HFD Group’s 122 Waterloo Street, which Knight Frank advised on, and St Vincent Plaza took investment in the first ten months of the year to more than £422 million – close to the 2007 total of £428 million. With another £183 million under offer, total investment could breach the £600 million mark by the end of 2017.
The previous best performing year was 2006, when investment in Glasgow offices reached £485 million – records are only available dating back to 1999. The ten-year average is £206 million.
Investment has been buoyed in 2017 by the sale of a number of Glasgow’s prime Grade A assets, including Wirefox Investment’s purchase of the Capella Building for £43.5 million in September and the £28 million deal for the Cuprum Building in January.
In the first half of the year, overseas investors accounted for 41% of activity, while private buyers and UK institutions represented 33% and 26% of investment respectively.
John Rae, Head of Knight Frank’s Glasgow office, said: “It’s already been a strong year for Glasgow and, with a couple of months still to go, it could be the best in its history. We predicted at the turn of last year that investment activity in Glasgow would pick up in 2017, as more of the city’s prime assets let up and were ready to trade – that prediction has come to pass and is still playing out.
“The sale of 122 Waterloo Street, in particular, marks a real turning point for the city. It’s one of the most significant transactions of recent years and marks the first time a Korean investor has purchased in Scotland – it’s further evidence of the market’s growing internationalisation.
“With a range of overseas buyers looking at Glasgow, strong competition is likely to emerge in the months ahead for its prime offices – especially with UK funds making a return to the city. Yields in the city centre remain at 5.50% – a relative discount compared to other regional UK centres – while the occupier market dynamics are exceptionally strong. We expect more high-quality assets to trade in Glasgow in the near future.”